If you’re like most business owners, you’re always looking for ways to improve your bottom line. One way to do this is by analyzing your customer retention rate. Excel can be a great tool for doing this analysis. In this blog post, we’ll show you 3 ways that retention analysis Excel can help your business!
Retention Analysis Excel
A retention analysis is a process that is used to identify the factors that influence why customers stay with a company or product. This information can be used to improve customer retention rates.
To do a retention analysis Excel table, businesses typically collect data on customer behavior and then use statistical methods to identify the factors that are most important in predicting whether a customer will stay or leave.
The Three Retention Curves
A retention rate of 90% means you have successfully found a product-market fit. But it doesn’t mean that you have found the right formula for everyone. Because different products, different customers, and different methods all require their own specific formulas.
Not everyone who subscribes to a music streaming service also has a subscription to a video streaming service.
Retention rates will be different for every business. An e-commerce site will measure retention rates based on when customers open an app, browse the site, make a purchase, and return to the site for repeat visits.
For subscription-based companies, retaining current clients is key to ensuring that they continue using your product. This shows they are satisfied with your service and plan on continuing to use it.
According to a new report from Mixpanel, the retention for most companies is below 20% for 8 weeks. However, for media companies or financial companies, a 25% for an 8-week average is ideal.
For SaaS and E-commerce industries, the retention rate should be 35 percent.
Retention is measured by events, time frames, and several actions taken in the time frame.
Actions or events are any activities users perform on the app such as signing up, purchasing, sharing, or merely opening the app. The period is how long you retain that data – it can be a day, a week, or a month.
The next step is to calculate the maximum number of actions that can be taken in a given period.
There are three main types of retention curves: declining curve, flattening curve, and smiling curve.
Retaining customers is the goal of every business. And achieving a “success defining” retention curve is the dream of any entrepreneur.
A 5% rise in customer loyalty can translate to a 75% spike in the value of your company.
It’s frustrating when a customer leaves your service, especially if you’ve put in a lot of effort to get them. It’s even more upsetting when your most loyal customer leaves you for a competitor. In both instances, you’ve failed to retain their business.
As a result, you lose customers.
Retention is key for any business looking to create a lasting customer base. When customers enjoy your product and have a positive experience, they are more likely to come back again and again.
According to Inc.com, customer retention is the most important factor that contributes to business growth. But does that mean your first-ever customer should be with you forever?
Just as nothing lasts forever, so, too, will your customers. A certain amount of churn is to be expected.
Acquiring new customers is important for business growth, but retaining existing customers is just as important. Spending too much money on acquiring new customers while neglecting to retain existing ones will eventually lead to the downfall of your business.
You should aim for 80% retention and 20% acquisition — not the other way around. This is the ideal ratio that pays dividends in profits, revenues, and growth.
Retention curves are a great way to visualize how customers interact with your product over time.
Declining Retention Curve
This suggests that, over time, fewer and fewer customers remain with the company. The retention curve eventually reaches zero, meaning that no customers are left.
This decrease in retention indicates that the product is losing its market.
Flattening Retention Curve
The ideal retention graph for a startup is one in which the majority of customers return after their first experience.
The flatter the retention rates, the better. This indicates high product health.
Smiling Retention Curve
This happens when a product is so good that customers will flock to it. The downward curve goes up when the product improves and offers new value propositions.
Eventually, no matter how great or innovative your product is, it will inevitably fall to the bottom of your industry because of cutthroat competition.
Now that you are familiar with different types of retention rates, there is one more term that founders should be aware of. It’s called rolling retention.
What is Rolling Retention?
Rolling retention is the number of users who returned to the app on a particular day or any day after that.
Let’s say you have 20 customers on the first day of the month. It dropped to 11 the next day. On the 7th day, one user returned.
On the 9th day, you got 8 unique users. On the 12th day, you got 6 unique users. And on the 17th day, you got 3 unique users.
Therefore, the rolling retention for Day 7 is 90% because 18 users out of the 20 were active. In contrast, only 3 users return on or after Day 14, meaning the rolling retention is just 15%.
In classic retention, the last day of the period does not know how many customers left on a specific day from start to end.
In rolling retention, you take into account not only people who opened the app on a given day but also those who opened it after that date.
Rolling retention is always higher than traditional retention. It gives a more accurate and complete view of account activity.
This measurement is more useful for those apps that are not expected to be used daily like mobile games, rental payment services, and travel planning tools.
Rolling retention is a complex metric that requires daily recounting of users to provide profound insights into the lifetime value and churn of customers.
Rolling retention cohorts are a great tool to help you make informed decisions. By understanding how to calculate and analyze retention cohorts, you can gain valuable insights into your customer base.
Top 5 Reasons for Customer Churn
After all the analysis, comparison, and examination of different groups, a product manager has to figure out why some numbers have decreased, why the graph took an unexpected turn, and so on.
Here are the top 5 reasons why your customers may have left you.
1. Bad Customer Service
Customer experience is how customers feel about your business when they interact with you.
Imagine a store clerk being rude to you for not having a smaller bill or you enter a store where tissues are placed on napkin shelves and napkins on towel shelves.
Would you consider going there again?
A customer’s decision to return to a store is based on three primary factors: ease of use, good value, and a good buying experience.
2. Bad Product Quality
Your product may not have met your customers’ expectations. Or your products failed to meet their needs.
Make sure to monitor any negative customer feedback you receive. This can help you identify where your product is going wrong and allow you to fix it.
3. Poor Customer Service Strategy
If you want to keep your customers happy, make sure your customer service is up to par. Friction in communication will only turn them away.
Even if your product or service is absolutely perfect, there will still be customers who will hesitate or misunderstand it.
As you are an expert in your field, they will expect your guidance. A reliable customer service strategy will smooth over any roadblocks, bringing you closer to your customers.
4. Zero WOW Factor
Many similar products exist, but the one that really stands out from the crowd has a greater ability to survive in a competitive marketplace.
That’s when the competition starts.
Why should people choose your fish in a huge fish market? The absence of a WoW factor will lead to market failure.
5. Failed to Deliver Promises
Your 24-hour lipstick faded in two hours. Your long-lasting perfume was gone in an hour. Would you buy a product that failed to keep its promise?
If you fail to deliver on your promise, then customers can easily switch to your competitor.
The data from your subscription retention analysis Excel table can provide valuable insights into why your subscription numbers may have increased or decreased over time. By identifying patterns and trends, you can take steps to address any potential issues and improve your retention rate going forward.
Overall, retention analysis can be a great tool for improving your business. By understanding your customer retention rate, you can make changes to improve it. Whether you’re looking to increase sales or reduce costs, using Excel to analyze your data can help you reach your goals!